Report: UBS may need more state aid

24th November 2008, Comments 0 comments

Swiss Banking Commission head says the initial government bailout the Swiss bank received in October may not help it tide over the financial crisis.

24 November 2008

ZURICH – The head of the Swiss Banking Commission said he did not rule out that UBS AG might need more government aid to survive the financial crisis, a daily newspaper reported Sunday.

Daniel Zuberbuehler told SonntagsZeitung that a USD 60 billion (CHF 71.5 billion) government bailout agreed in October with UBS had stabilised the bank's liquidity situation.

But "if you look at the development of the market, it is indeed open whether our package of measures will be sufficient," he was quoted as saying.

UBS is Switzerland's largest bank, and if it faces more difficulties, the government "might have to inject more capital," he reportedly said.

Of last month's bailout, about USD 5 billion will be used to bolster the bank's reserves and USD 54 billion to help it dispose of high-risk securities. Profits from the sale of these assets will be shared between the Swiss National Bank and UBS.

UBS spokesman Dominique Gerster declined to comment Sunday, but said UBS was in regular contact with the banking commission.

Zuberbuehler said it was unlikely another bank would take over UBS, as a buyer would have to acquire the entire bailout deal, including illiquid UBS shares held by the Swiss National Bank.

He ruled out a merger between UBS and Credit Suisse Group because, he said, the risks of such a big operation were too high under current market conditions.

[AP / Expatica]

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